'We're Confident Arrowhead's ARC-520 Is Active Drug For HBV,' Piper Jaffray Says

Edward Tenthoff of Piper Jaffray attended Arrowhead's R&D Day and left "more confident" that the company's ARC-520 is an "active drug" for HBV patients. During the Arrowhead's presentation, management reported that a single dose of 4mg/kg ARC-520 achieved mean-max 1.05 log and peak 1.9 log reductions in S-antigen in 4 nuc-naïve, HBeAG+ patients in the seventh cohort of the Heparc-2001 study. "The company believes this improved efficacy is due to new understanding about the role of integrated HBV DNA," Tenthoff wrote. "ARC-520 targets cccDNA, which is more prevalent in HBeAg+ HBV patients. Double-stranded linear (dslDNA) is more common and integrates in HBeAg- patients, which is not covered as well by ARC-520, accounting for the lower S-antigen efficacy." Tenthoff also added: "Importantly, ARC-520 is active against HBeAg (E antigen) and HBcrAG (core antigen). In addition, patients receiving prior nuc therapy also showed decreased cccDNA and response to ARC-520. Importantly, ARC-520 remains safe and well tolerated up to 4mg/kg." Tenthoff also pointed out that Arrowhead is now conducting the multi-dose Phase IIb Heparc-2002 and 2003 studies in E-antigen negative and positive patients and will soon begin adaptive design MONARCH trial with initial cohorts in treatment-naïve HBV patients. Finally, the analyst argued that Arrowhead is "more than just an HBV story" as the company is dose escalating ARC-AAT in PiZZ AATD patients and plans on advancing ARC-F12 into the clinic in 2016. Bottom line, the ARC-520 data resulted in the analyst becoming incrementally bullish on the name. Shares were maintained at Outperform with a price target raised to $20 from a previous $12.